Federal 340B overhaul bill unlikely this year

A bipartisan Senate effort at 340B program reform is likely dead this Congress, according to lobbyists and policy watchers.

The so-called gang of six group of senators has been working on an overhaul of the program since 2024 that aims to address concerns of both providers and drugmakers. However, that effort has not advanced beyond the group’s issuing draft legislation and holding stakeholder meetings.

“My perspective has been and continues to be that it’s an uphill battle in Congress to get bipartisan support to make major 340B changes and I don’t see that as very likely,” said Jeff Davis, an attorney for Bass, Berry & Sims. “But where the focus is lying now is on HRSA [Health Resources & Services Administration] activity and activity in the courts.”

The work of the group of legislators has been disrupted by shifting membership in the group as some have left Congress. The latest was Sen. Markwayne Mullin (R-Okla.), who was confirmed last month as secretary of the Department of Homeland Security.

“Changes to the group in the form of retirements or moves and need to rebuild it this Congress; given those changes along with the myriad other demands (e.g., HR 1, funding bills) on members and staff, that has created a lot of impediments to the work,” a lobbyist said on background. “But I don’t think anyone is expecting this to become a bill ripe for near-term action this Congress based on where we are at presently.”

Another lobbyist said that Senate staff continue to work on the bill and the group is looking for a Republican to replace Mullin.

“If that happens, we could potentially see renewed stakeholder engagement,” the lobbyist said on background. “Our view is that near-term action does not seem likely given the timing and politics.”

Reconciliation bill

Policy watchers agreed that there is little chance that Congress will include 340B program reform or other 340B policies in a looming reconciliation bill. That legislation, like the 2025 One Big Beautiful Bill Act, requires only a simple Senate majority to pass.

Although legislators discussed the bill earlier this month, including a range of healthcare policies within it, congressional leaders indicated last week that it is unlikely to do so, according to lobbyists.

“We don’t think 340B is really in the reconciliation mix given [the] limited impact on federal spending,” said a lobbyist.

Procedural rules in Congress limit reconciliation provisions to those that directly impact federal spending.

Shifting push

Industry observers said the initial push for the legislation primarily was driven by drugmakers, due to the fast growth in 340B — despite their various administrative measures to slow it down. The program has grown rapidly from $6.6 billion in 2010 to $81 billion in 2024.

But the draft legislation left unaddressed a core concern of drugmakers: the definition of a 340B-eligible patient.

“That was a huge missing piece of the legislation because that’s sort of the crux of the program,” a policy watcher said on background. “The scope of the ability to generate 340B savings is dependent on the scope of the definition of a 340B-eligible patient. The more individuals who meet the definition, the more 340B drugs you can use for savings.”

If the legislation narrowed the definition of patients, that would shrink the program significantly. The senators who authored the 2024 draft legislation said that they were still working on that provision.

More recently, drugmakers doubled down on administrative changes and legal challenges.

Earlier this month, AbbVie Inc. filed a lawsuit against the federal government challenging the definition of a 340B-eligible patient. It stated that the definition established by HRSA in the 30-year-old guidance is unwieldy and enables inappropriate access to 340B pricing discounts.

Additionally, last week, Bristol-Myers Squibb became the fifth manufacturer to implement requirements for 340B covered entities to submit data for in-house pharmacy claims. Providers decried such policies as costly and impeding 340B revenue.

“You’re seeing providers calling on HRSA to take action and tell the manufacturers they’re not permitted to do that,” Davis said. “So, that’s where you’re getting a sense of urgency from providers.”

Provider pressure

There is less pressure from providers for a 340B legislative overhaul because they have generally stymied drugmaker efforts to limit the program.

At least 21 states have enacted laws barring drugmaker restrictions on contract pharmacy use. Federal courts generally have upheld such laws, although a split among appeals courts recently emerged when the Fourth Circuit struck down such laws in Maryland and West Virginia in recent weeks.

Early this year, providers also successfully challenged a HRSA rebate model for 340B, which the agency withdrew.

However, HRSA recently finished collecting public feedback on a potential relaunch of the model. That effort was challenged by a bipartisan group of nearly 100 members of Congress last month, who urged appropriators to add language to the HHS funding bill to bar the rebate model.

Looming cut

CMS soon may add pressure on 340B providers by retrying cuts in Medicare payments for 340B drugs. The first Trump administration implemented a roughly 30% cut to Medicare Part B drug payments for 340B hospitals. The Supreme Court struck down those cuts in 2022 on procedural grounds, which resulted in a $9 billion repayment to hospitals.

However, CMS this week finished collecting provider responses to a drug cost survey that was expected to provide legal justification for a new attempt at the Medicare 340B payment cuts. That policy could appear in the 2027 hospital outpatient prospective payment system’s proposed rule, which CMS is expected to issue in July.